Nationwide, borrowers have accumulated more than $1 trillion in student loan debt. But the burden of that debt looks much different for an individual living in New Hampshire than someone living in New Mexico, according to a new study from WalletHub.
WalletHub’s analysis takes into account several other factors to measure the “best and worst” states for student loan debt, saying post-college success depends on more than just how much debt a graduate has to repay.
“The simple truth is that higher education is no longer inexpensive,” said Richard Toomey, dean of university financial aid services at Santa Clara University, in a statement. “The partnership that previously existed between the federal government, states, and families is no longer in balance. Much of the burden has shifted to families to finance a higher education, and student loan borrowing is an inevitable part of that mix.”
The analysis used seven metrics to compare every state and the District of Columbia:
With all of those factors taken into account, Utah was ranked as the best state for student loan debt. Utah was also ranked second when it comes to student debt as a percentage of income (adjusted by cost of living), second for the lowest unemployment rate for those between 25 and 34, fourth for the lowest percentage of student loan balances in past-due or default status, and fourth for the lowest percentage of student loan borrowers over the age of 50. Wyoming, North Dakota, Washington, and Nebraska were also ranked in the top five states overall. The five lowest-ranked states overall were Georgia, Maine, Connecticut, Rhode Island, and Mississippi.
Still, the issue of growing student loan debt is more of a concern for those who do not end up earning a college degree, according to Karen Cooper, associate dean and director of financial aid at Stanford University.
“If we have more student loan debt because more people are getting an education, earning their degrees and finding good jobs, then we shouldn’t be worried about the growth of student loans,” Cooper said in a statement. “I think we should be concerned about student loan debt for those who are stopping out before earning their degrees, or who are borrowing significant amounts for training programs that don’t result in jobs that would support repayment.”
Looking at individual metrics, the difference between the highest-ranked and lowest-ranked states was as much as two times. New Hampshire’s average student debt, for example, is twice as high as New Mexico’s, the report found. The proportion of students with debt in New Hampshire is two times higher than in Nevada, and student debt as a percentage of income in the District of Columbia is twice as high as in Wyoming. Comparing the percentages of student loan borrowers in past-due or default status, there is a three-times difference between Vermont (the state with the lowest percentage) and Mississippi (the state with the highest percentage).
“This is the first time in U.S. history that student loan debt exceeds credit card debt,” said Timothy Wolfe, director of student financial aid and scholarships at the University of Nevada, Reno, in a statement. “Students should be cautious about their student loan debt because it can become a lifelong issue.”
Publication Date: 8/10/2015